Apache Reports First-Quarter Results, $4 Billion Asset Sales Goal, Program To Repurchase Up To 30 Million Shares First-quarter production growth driven by 45% increase in North American onshore liquids PR Newswire HOUSTON, May 9, 2013 HOUSTON, May 9, 2013 /PRNewswire/ --Apache Corporation (NYSE, Nasdaq: APA) reported first-quarter earnings of $698 million, or $1.76 per diluted common share, and adjusted earnings*, which exclude certain items that impact the comparability of operating results, of $806 million or $2.02 per share. During the first quarter, worldwide production increased to 781,819 barrels of oil equivalent (boe) per day driven by a 45 percent increase in North American onshore liquid hydrocarbons output compared with the year-earlier period; earnings declined as a result of lower commodity prices. Cash from operations before changes in operating assets and liabilities* totaled $2.4 billion. Apache also announced a plan to divest $4 billion in assets by year-end 2013. The company intends to use initial proceeds of $2 billion to reduce debt and enhance financial flexibility. Additional proceeds are intended to be used to repurchase approximately $2 billion of Apache common shares under a 30-million-share repurchase program authorized by the Board of Directors. G. Steven Farris, Apache's chairman and chief executive officer, said, "We are showing strong results from the strategic shift that we outlined in 2012, with production from onshore North American liquids plays of 165,000 barrels per day in the first quarter. We expect our onshore drilling programs will continue to contribute significantly to meeting our production targets." Farris added, "This rationalization of our asset base flows naturally from more than $16 billion of acquisitions over the last three years. Our goal is to ensure that Apache's portfolio has the right mix of assets to generate attractive rates of return, drive production growth, and create shareholder value. "In this vein, our Board and management team conducted a strategic portfolio review to identify assets that no longer fit our growth profile," Farris said. "Based on this review, we have a process well under way to divest non-core assets while retaining those that drive long-term growth and generate cash from operations. We are also pursuing other monetizations including joint venture partnerships. "Proceeds from this program will enable us to reduce debt and repurchase up to 30 million shares or approximately 7.5 percent of shares outstanding," Farris said. "We believe that as a result of this process, we will become an even stronger company with a focused portfolio of high-growth, high-return assets." Agreements pertaining to asset sales and monetizations are subject to market conditions including commodity prices. Apache's annual production guidance will not be adjusted until it enters into definitive agreements with potential acquirers or joint venture partners. The timing and actual number of shares repurchased will depend on a variety of factors including the stock price, corporate and regulatory requirements and other market and economic conditions. Repurchased shares would be available for general corporate purposes. First-quarter results In the prior-year period, Apache reported earnings of $778 million or $2.00 per share, adjusted earnings of $1.2 billion or $3.00 per share, and cash from operations before changes in operating assets and liabilities of $2.6 billion. First-quarter 2013 worldwide production of 781,819 boe per day compared with 769,296 boe per day in the prior-year period and 800,005 boe per day in the fourth quarter of 2012. As previously disclosed, first-quarter 2013 worldwide production was negatively impacted by interruptions associated with cyclones in Australia and third-party gas plant downtime in Canada. Apache currently is the second most-active U.S. onshore driller with 42 rigs in operation in the Permian Basin and 28 rigs active in the Anadarko Basin. The Permian and Central regions averaged 205,650 boe per day – 26 percent of Apache's worldwide output – and spent 40 percent of the company's first-quarter drilling capital. Growth in onshore liquids output was offset by the deferred production of 4,100 boe per day in Canada and 3,500 boe per day in Australia, lower North American gas production because of reduced dry gas drilling activity and natural field declines in other international regions. The company had previously incorporated production deferrals and declines into its production guidance, and remains on track to achieve its full-year guidance of 3 to 5 percent production growth. This production guidance has not been adjusted for any variances associated with future divestitures. Operational highlights oProduction in the Anadarko Basin – Apache's Central Region – increased 129 percent from the year-earlier period to 86,215 boe per day, largely a result of successful drilling in the Tonkawa, Granite Wash and other liquids-rich formations. oPermian Basin production rose to 119,435 boe per day, up 20 percent from the prior-year period, as a result of increased drilling and recompletion activity in oil and liquids-rich plays, including the Wolfcamp Shale, the Cline Shale and Yeso. oThe Tonto oil field in the United Kingdom sector of the North Sea commenced production on April 24, 2013. Tonto-1, the first producing well, came on stream at an initial rate of 10,346 barrels of oil per day through a tie-back to the Forties Bravo production platform. oThree discoveries in three basins in Egypt – Alamein, Faghur and Matruh – highlighted the company's diverse potential for new oil and gas developments across its concessions. Oil and gas prices Liquid hydrocarbons represented 53 percent of first-quarter production but contributed 82 percent of revenues because of the premium prices received for crude oil versus natural gas. Worldwide, Apache received an average price of $101.72 per barrel of oil during the first quarter, down from $111.22 per barrel during the prior-year period. Apache's oil realizations reflect higher prices relative to the West Texas Intermediate benchmark realized on Dated Brent crude produced in the company's Australia, North Sea and Egypt regions, and on sweet crude from the Gulf of Mexico regions. Apache received these premium prices on approximately 68 percent of its crude oil production. Apache received an average of $3.72 per thousand cubic feet (Mcf) of natural gas, down from $3.82 per Mcf in the prior-year period. The average price received for Apache's international gas production – $3.99 per Mcf – exceeded the average price received for company's North American gas production for the fifth consecutive quarter. Approximately 37 percent of Apache's gas output is produced outside North America. *Adjusted earnings and cash from operations before changes in operating assets and liabilities are non-GAAP measures. Please see reconciliations below. For supplemental financial and operational data and non-GAAP information, please go to http://www.apachecorp.com/financialinfo. About Apache Apache Corporation is an oil and gas exploration and production company with operations in the United States, Canada, Egypt, the United Kingdom North Sea, Australia and Argentina. Apache posts announcements, operational updates, investor information and copies of all press releases on its website, www.apachecorp.com. Conference call Apache will conduct a conference call to discuss its results and its portfolio review at 9 a.m. Central time on Thursday, May 9. The conference call will be webcast from Apache's website, www.apachecorp.com. The webcast replay will be archived on Apache's website. The conference call will be available for delayed playback by telephone for one week beginning at approximately noon on May 9. To access the telephone playback, dial 855-859-2056 or 404-537-3406 for international calls. The conference access code is 84101004. Forward-looking statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. These statements include, but are not limited to, statements about future plans, expectations, and objectives for Apache's operations, including statements about our drilling plans and production expectations, asset sales and monetizations and share repurchases. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See "Risk Factors" in our 2012 Form 10-K filed with the Securities and Exchange Commission for a discussion of risk factors that affect our business. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future development, or otherwise, except as may be required by law. APACHE CORPORATION STATEMENT OF CONSOLIDATED OPERATIONS (In millions, except per share data) For the Quarter Ended March 31, 2013 2012 REVENUES AND OTHER: Oil revenues $ 3,255 $ 3,512 Gas revenues 735 811 NGL revenues 156 134 Oil and gas production revenues 4,146 4,457 Other (70) 79 4,076 4,536 COSTS AND EXPENSES: Depreciation, depletion and amortization Oil and gas property and equipment Recurring 1,265 1,135 Additional 65 521 Other assets 105 84 Asset retirement obligation accretion 65 55 Lease operating expenses 771 673 Gathering and transportation 74 77 Taxes other than income 242 257 General and administrative 116 128 Merger, acquisitions & transition - 6 Financing costs, net 53 40 2,756 2,976 INCOME BEFORE INCOME TAXES 1,320 1,560 Current income tax provision 497 725 Deferred income tax provision 106 38 NET INCOME 717 797 Preferred stock dividends 19 19 INCOME ATTRIBUTABLE TO COMMON STOCK $ 698 $ 778 NET INCOME PER COMMON SHARE: Basic $ 1.78 $ 2.02 Diluted $ 1.76 $ 2.00 WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: Basic 392 385 Diluted 408 399 DIVIDENDS DECLARED PER COMMON SHARE $ 0.20 $ 0.17 APACHE CORPORATION SUMMARY OF CAPITAL COSTS INCURRED (In millions) For the Quarter Ended March 31, 2013 2012 CAPITAL EXPENDITURES (1): Exploration & Development Costs United States $ 1,269 $ 794 Canada 258 198 North America 1,527 992 Egypt 262 250 Australia 225 78 North Sea 177 196 Argentina 33 84 New Ventures - International 5 21 International 702 629 Worldwide Exploration & Development $ 2,229 $ 1,621 Costs Gathering, Transmission and Processing Facilities United States $ 18 $ 12 Canada 30 44 Egypt 19 17 Australia 180 172 Argentina 2 4 Total Gathering, Transmission and $ 249 $ 249 Processing Capitalized Interest $ 93 $ 66 Capital Expenditures, excluding $ 2,571 $ 1,936 Acquisitions Acquisitions $ 310 $ 60 (1) Accrual basis APACHE CORPORATION SUMMARY BALANCE SHEET INFORMATION (In millions) March 31, December 31, 2013 2012 Cash and Cash Equivalents $ 248 $ 160 Other Current Assets 4,600 4,802 Property and Equipment, net 54,289 53,280 Goodwill 1,369 1,289 Other Assets 1,286 1,206 Total Assets $ 61,792 $ 60,737 Short-Term Debt $ 994 $ 990 Other Current Liabilities 4,568 4,546 Long-Term Debt 11,485 11,355 Deferred Credits and Other Noncurrent 12,758 12,515 Liabilities Shareholders' Equity 31,987 31,331 Total Liabilities and Shareholders' $ 61,792 $ 60,737 Equity Common shares outstanding at end of 392 392 period APACHE CORPORATION PRODUCTION INFORMATION For the Quarter Ended March 31, 2013 2012 OIL VOLUME - Barrels per day Central 20,526 6,483 Permian 67,900 56,481 GOM Deepwater 7,235 5,801 GOM Shelf 43,625 46,585 GC Onshore 9,977 10,578 United States 149,263 125,928 Canada 17,176 15,582 North America 166,439 141,510 Egypt 91,315 99,490 Australia 20,001 30,398 North Sea 68,462 65,946 Argentina 9,297 9,632 International 189,075 205,466 Total 355,514 346,976 NATURAL GAS VOLUME - Mcf per day Central 277,025 165,863 Permian 185,713 180,253 GOM Deepwater 31,136 46,996 GOM Shelf 254,405 332,140 GC Onshore 105,412 92,241 United States 853,691 817,493 Canada 519,175 636,227 North America 1,372,866 1,453,720 Egypt 365,612 376,067 Australia 214,395 224,337 North Sea 55,032 67,066 Argentina 188,259 211,193 International 823,298 878,663 Total^ 2,196,164 2,332,383 NGL VOLUME - Barrels per day Central 19,517 3,513 Permian 20,583 12,650 GOM Deepwater 887 256 GOM Shelf 5,999 3,594 GC Onshore 2,313 2,304 United States 49,299 22,317 Canada 6,663 6,312 North America 55,962 28,629 North Sea 1,494 1,966 Argentina 2,822 2,994 International 4,316 4,960 Total 60,278 33,589 BOE per day Central 86,215 37,640 Permian 119,435 99,173 GOM Deepwater 13,311 13,890 GOM Shelf 92,024 105,535 GC Onshore 29,859 28,255 United States 340,844 284,493 Canada 110,368 127,932 North America 451,212 412,425 Egypt 152,250 162,168 Australia 55,734 67,788 North Sea 79,128 79,090 Argentina 43,495 47,825 International 330,607 356,871 Total^ 781,819 769,296 APACHE CORPORATION PRICE INFORMATION For the Quarter Ended March 31, 2013 2012 AVERAGE OIL PRICE PER BARREL Central $ 88.15 $ 98.79 Permian 82.78 98.36 GOM Deepwater 110.47 110.83 GOM Shelf 111.67 114.04 GC Onshore 111.03 113.41 United States ^(1) 94.45 102.08 Canada 82.33 92.47 North America ^(1) 93.20 101.02 Egypt 110.99 123.55 Australia^(1) 112.35 122.95 North Sea^(1) 110.53 113.19 Argentina 75.36 83.03 International ^(1) 109.22 118.24 Total^(1) 101.72 111.22 AVERAGE NATURAL GAS PRICE PER MCF Central $ 3.73 $ 3.10 Permian 3.77 3.72 GOM Deepwater 3.40 2.98 GOM Shelf 3.54 3.17 GC Onshore 3.55 2.80 United States ^(1) 3.75 3.93 Canada ^(1) 3.23 3.41 North America ^(1) 3.56 3.70 Egypt 2.95 3.79 Australia 4.94 4.18 North Sea 10.00 7.97 Argentina 3.18 2.98 International 3.99 4.02 Total ^(1) 3.72 3.82 AVERAGE NGL PRICE PER BARREL Central $ 26.54 $ 37.48 Permian 25.71 44.78 GOM Deepwater 34.68 38.51 GOM Shelf 28.87 42.93 GC Onshore 33.69 47.16 United States 26.96 43.51 Canada 32.15 41.63 North America 27.58 43.09 North Sea 71.16 84.11 Argentina 30.28 26.20 International 44.43 49.16 Total 28.78 43.99 ^(1) Prices reflect the impact of financial derivative hedging activities. APACHE CORPORATION NON-GAAP FINANCIAL MEASURES (In millions, except per share data) Reconciliation of income attributable to common stock to adjusted earnings: The press release discusses Apache's adjusted earnings. Adjusted earnings exclude certain items that management believes affect the comparability of operating results and are meaningful for the following reasons: • Management uses adjusted earnings to evaluate the company's operational trends and performance relative to other oil and gas producing companies. Management believes this presentation may be useful to investors who follow • the practice of some industry analysts who adjust reported company earnings for items that may obscure underlying fundamentals and trends. The reconciling items below are the types of items management believes are • frequently excluded by analysts when evaluating the operating trends and comparability of the company's results. For the Quarter Ended March 31, 2013 2012 Income Attributable to Common Stock (GAAP) $ 698 $ 778 Adjustments: Oil & gas property write-downs, net of tax 42 390 Deferred tax adjustments 39 - Commodity derivative mark-to-market, net of tax 31 - Unrealized foreign currency fluctuation impact on (4) 7 deferred tax expense Merger, acquisitions & transition, net of tax - 3 Adjusted Earnings (Non-GAAP) $ 806 $ 1,178 Net Income per Common Share - Diluted (GAAP) $ 1.76 $ 2.00 Adjustments: Oil & gas property write-downs, net of tax 0.10 0.97 Deferred tax adjustments 0.10 - Commodity derivative mark-to-market, net of tax 0.07 - Unrealized foreign currency fluctuation impact on (0.01) 0.02 deferred tax expense Merger, acquisitions & transition, net of tax - 0.01 Adjusted Earnings Per Share - Diluted (Non-GAAP) $ 2.02 $ 3.00 Reconciliation of net cash provided by operating activities to cash from operations before changes in operating assets and liabilities: The press release discusses Apache's cash from operations before changes in operating assets and liabilities. It is presented because management believes the information is useful for investors because it is used internally and widely accepted by those following the oil and gas industry as a financial indicator of a company's ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies, and is frequently included in published research when providing investment recommendations. Cash from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity, but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities. The following table reconciles net cash provided by operating activities to cash from operations before changes in operating assets and liabilities. For the Quarter Ended March 31, 2013 2012 Net cash provided by operating activities $ 2,621 $ 2,007 Changes in operating assets and liabilities (263) 641 Cash from operations before changes in operating assets and liabilities $ 2,358 $ 2,648 APA-F SOURCE Apache Corporation Website: http://www.apachecorp.com Contact: Media: (713) 296-7276 Bill Mintz; or (713) 296-6100 Patrick Cassidy; or (713) 296-6662 Bob Dye; or (281) 302-2646 John Roper; or Investor: (281) 302-2286, Brady Parish; or Castlen Kennedy; or Christopher Cortez; or Alicia Reis, Website: www.apachecorp.com
Apache Reports First-Quarter Results, $4 Billion Asset Sales Goal, Program To Repurchase Up To 30 Million Shares
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